Greentech VC Investing Hit Second Highest Quarter At $2.5B

Venture capital firms poured $2.5 billion into green technology in the first quarter of 2011, the second-highest quarterly figure ever for the industry. But is the upswing a sign of renewed investor confidence, or a sign that VCs are stepping into the breach that might otherwise be filled by the public markets?

The first quarter’s $2.5 billion global green VC figure, compiled by Cleantech Group and reported by CNET, is the second-highest on record, topped only by the $3 billion raised in the third quarter of 2008, right before the global financial crisis and economic downturn began. It also marks an impressive upturn from the $1.68 billion in green VC cash raised in the fourth quarter of 2010 and the $1.97 billion reported the first quarter of last year.

At the same time, much of the first quarter’s venture capital investment was concentrated in larger deals for later-stage companies, many of them in the capital-intensive worlds of renewable energy and electric vehicles. Toward the end of 2010, Reuters reported a sharp decline in investing in early-stage cleantech companies because of the lack of returns for investors.

Are later stage greentech companies raising more money because they’re unable to successfully take to the public markets? Solyndra, the thin-film solar module maker had planned to go public last year and raise as much as $300 million, but canceled its IPO to instead raise $175 million by selling convertible promissory notes to existing investors. And this February, Solyndra announced it had secured a $75 million credit facility from existing investors, as it seeks to drive down its manufacturing costs (that $75 million isn’t included in the first quarter’s VC investment total).

Let’s not forget the big IPOs that did come off in the first quarter. China’s Sinovel Wind held a 9.46 billion yuan ($1.4 billion) public offering on the Shanghai Stock Exchange, clocking in as the quarter’s biggest greentech IPO. And in the U.S., Khosla-backed biomass-to-isobutanol startup Gevo raised $95.7 million in its Feb. 9 debut, and has seen its share price climb steadily since then.